This blog is about giving voice to the voiceless in occupied Palestine by myself and other contributing journalists who have seen first-hand the horror of Israeli apartheid.

Friday, May 05, 2006

In New Problem for Palestinians, Banks Reject Transfers

By GREG MYRE

The New York Times4 May 2006

RAMALLAH, West Bank, May 3 -- As the Hamas-led governmentstruggles to raise cash after the suspension of Westernaid to the Palestinian Authority, it faces a new andunexpected obstacle: banks here are refusing to accept itsmoney transfers from abroad.

The United States Treasury last month barred almost allfinancial dealings with the Palestinian Authority inresponse to Hamas's rise to power, under a federal lawthat makes it a crime to provide funds to terroristgroups.

That has rattled local banks, which are tied to theAmerican banking system. The banks abruptly stoppedhandling even basic wire transfers needed for theauthority to receive money donated by foreign countries.

In recent weeks Arab countries, coordinated by the ArabLeague in Cairo, have raised more than $70 million. But sofar, Palestinian officials say, no bank has been willingto move the money to the West Bank or the Gaza Strip, waryof legal entanglements with the United States.

Ismail Haniya, the Palestinian prime minister and a leaderof Hamas, said Wednesday that the government could beginpaying overdue salaries, which are now two months late, ifthe money reached the Palestinian Authority's bankaccounts.

"The problem is not with raising money," Mr. Haniya saidat a news conference in Gaza City. "The problem is how totransfer this money to the Palestinians."

Mr. Haniya accused the United States of putting pressureon the banks "so that the money we have collected does notreach citizens or civil servants." Hamas says it will notbow to political pressure from Israel or the West. Butwithout money from abroad, it is not clear how thePalestinian Authority can function.

The European Union joined the United States in suspendingall financial assistance for the authority after Hamastook office in late March as a result of its decisivevictory in Palestinian legislative elections. Israel hasalso frozen the roughly $50 million it collects in tax andcustoms revenues each month on behalf of the Palestinians.

Now, with the United States Treasury's action, even Araband Muslim countries that want to assist the authorityhave not been able to deliver their aid.

American diplomats say the United States is not directlyputting pressure on the banks. But the Treasury haspublicized the government's position that Hamas is aterrorist organization and that financial transactionswith the Palestinian Authority are barred. There are a fewexceptions to the ban, including dealings with thePalestinian Authority president, Mahmoud Abbas, whoopposes violence against Israel and supports peace talks.

"Generally speaking, if an organization or individual isfacilitating direct fund-raising for Hamas, they openthemselves up to action by the United States," said MollyMillerwise, a spokeswoman for the Treasury in Washington.

On Tuesday, Stuart Levey, the under secretary forterrorism and financial intelligence at the Treasury, wasin Israel to meet with senior Israeli officials on how toprevent money from reaching designated terrorist groups,the United States Embassy said.

The Palestinian Authority needs at least $150 million amonth just to pay salaries and run essential institutionslike schools, hospitals and the police force. On its ownthe authority raises barely $30 million a month, and it isfalling deeper into debt each day.

Since coming to power, the Hamas-dominated government hasmissed two paydays for the authority's 165,000 employees.Palestinian nurses and teachers, civil servants andsecurity force officers like Muhammad Burbar, 23, arecaught in the middle.

Mr. Burbar has not received his monthly $333 paychecksince February. He is out of cash, and his wife needsmedical treatment. On Tuesday the couple sold a tiny goldbracelet and a pendant they bought for their daughter whenshe was born last year.

They received $28 from a gold shop in Ramallah.

"We didn't have any other choice," Mr. Burbar said. "Ihave no idea when I will get paid again, and I'm notoptimistic. This could go on for another six months."

The shop owner, Khader al-Asbah, said 99 percent of hiscustomers in the last two months sold family jewelry,traditionally held as a form of savings by Palestinianfamilies.

Economists and aid groups say the Palestinian economy,ailing since the start of an uprising against Israel in2000, risks a major contraction if government workers gounpaid for months.

The United States government lacks legal jurisdiction overfinancial transactions abroad if no American citizens orinstitutions are involved. But many Middle Eastern bankshave branches in the United States or have businessrelationships with American banks to handle internationaltransactions.

Banks here fear they could jeopardize their ties to theUnited States or put themselves at legal risk if theyhandle money for the Palestinian Authority, regardless ofits origin, said George Abed, governor of the PalestinianMonetary Authority, which effectively serves as thePalestinian central bank.

The Arab Bank, based in Jordan, has held the main accountfor the Palestinian Authority in recent years. Officialsthere and at other banks have refused to discuss the issueof transactions for the authority.

But Mr. Abed acknowledged that the Palestinian governmentand the banks were in an extremely awkward position."Banks, being careful as they usually are, have beentelling the Palestinian Authority that they can't completethese transactions," Mr. Abed said Tuesday in an interviewin Ramallah.

The Arab Bank, which has branches in the United States,has been subject to American legal action, including alawsuit filed in Federal District Court in Brooklyn byabout 50 American survivors or relatives of people killedin suicide bombings or other attacks by Hamas.

"No bank wants to risk being cut off from internationaltransactions," Mr. Abed said. "This is oxygen for banks.If you are a bank, and you shut yourself out of the UnitedStates and Europe, what are you going to do -- conduct allyour transactions in rupees?"

Though the banks are wary, Hamas says it will not give in.

One option is to have the Arab League send the donatedmoney directly into the personal bank accounts ofPalestinian Authority employees, bypassing the authority.But that may be highly impractical, because money wouldhave to be wired into 165,000 separate bank accounts.

"It is being studied, but it does not sound veryfeasible," Hesham Youssef, a senior Arab League official,said in a phone interview from Cairo.

The United States, the European Union and Israel havedemanded that Hamas do three things before they willconsider dealing with the group: recognize Israel, disavowviolence and accept existing Israeli-Palestinianagreements.

Hamas has refused, instead appealing to Arab and Muslimcountries to replace the lost financing.

Arab League countries recently renewed a pledge made yearsago to provide the Palestinian Authority with $55 milliona month, but it has regularly fallen short. Even if theleague finds a way to get the money to the PalestinianAuthority, it is barely one-third of what the authorityneeds to pay its monthly bills.Photo by: Nayef Hashlamoun

2 comments:

Anonymous
said...

The US is a free country. This means that you are free to do as you are told.Hamas was freely elected by the Palestinians, but the US was upset.Freedom is the word here!The US is upset that Hamas was voted for. They don't recognize Hamas.BUT HAMAS WAS VOTED IN!Democracy only works if the elected party is approved by Bush!I don't agree with Hamas, but they were elected.What is the problem?Bush is the problem!Let freedom prevail. Let the new government work things out.Give them time!